If you are new to trucking, have been working for a carrier, or if you are looking into starting a business that requires commercial trucks, you’ve probably looked into the legal requirements to make sure you stay in compliance. If you are planning on buying a truck and becoming an owner operator, you’ll most likely have to apply for motor carrier authority and obtain an MC number from the Federal Motor Carrier Safety Administration (FMCSA). It may sound intimidating, but it isn’t as difficult as it sounds.
What is an MC Number?
An MC number is a six digit number that is preceded by two letters (“MC”, “FF”, or “MX”). They are issued by the FMCSA, and act as your authority to operate in the capacity specified in your initial application. You must maintain this number in order to stay compliant.
Who Needs to Apply for Motor Carrier Authority?
According to the FMCSA, any company that is involved in either (or both) of the following are required to obtain Interstate Operating Authority (MC number), in addition to a DOT number.
- Entities that transport, or arrange for the transport of (Freight Brokers) federally regulated commodities, or commodities owned by others.
- Entities that, for a fee, transport passengers in interstate commerce.
Most truck drivers that are contemplating becoming an owner operator will fall under the first category (hauling freight that is owned by others). Therefore, you’ll have to apply for an MC number.
Who Doesn’t Need to Apply for a Motor Carrier Number?
Fortunately, The FMCSA is very transparent when describing their requirements. They state exactly that the following are not required to apply for authority.
- Carriers that haul their own privately owned cargo.
- Carriers that operate exclusively in a federally designated “Commercial Zone” that is exempt from interstate operating authority regulations. This is usually a region consisting of multiple states that surround a major metropolitan area. Most OTR truckers will not fall under this category.
- “For Hire” carriers that only haul freight that is not federally regulated.
Most companies that fall under this category will be in an industry that requires them to have their own fleet of trucks to sustain their own business operations, while not offering transportation services to others. An example of this would be a commercial laundry company that rents and launders uniforms to third parties and uses their private fleet of trucks to transport the garments to and from their customer’s sites.
How do you apply?
After determining that you meet all of the requirements, and have all of your necessary documents in order, all applications are done through the Unified Registration System (URS) as of December 12, 2015. The application process is completed entirely online, and takes a few hours to complete.
What Are the Different Types of Operating Authority?
If you’ve determined that you need to obtain authority to operate, the next step is to figure out exactly which type you’ll need. There are a few different types to choose from, but again, the FMCSA is pretty clear in their requirements. It shouldn’t be too hard to figure out which category you’ll fall under.
(It is important to note, that you could fall under multiple categories. If so, you’ll have to apply for all types of operating authority that you will fall under. Unfortunately, the FMCSA charges a fee of $300 for each one. So if you were applying for two types, it would cost you $600.)
Motor Carrier of Property (Except Household Goods)
This type of authority is meant for the vast majority of truckers out there. It authorizes a company to transport regulated cargo (except household goods) for the general public, in exchange for payment. In order to obtain this type of operating authority, a carrier must obtain and file proof of BI & PD Insurance (Bodily Injury and Property Damage). You are not required to maintain any type of cargo insurance, though it is usually recommended.
Motor Carrier of Household Goods
Household Goods authority is what you’d need if you were planning on starting a moving company. It is defined as operating authority transport household goods for the general public, in exchange for payment. Household goods are personal objects that will be used in a home, in the instance of a householder requesting and paying for the transportation of the goods. BI & PD Insurance is also a requirement for MC of Household Goods authority.
Broker of Property (Except Household Goods)
If you are a carrier, you most likely won’t fall under this category though it is possible. A Broker of Property arranges for the transportation of property that belongs to a third party. They will use an authorized motor carrier for the transportation, and the broker themselves will never take possession or assume responsibility for the cargo. Freight Brokers fall under this category.
Broker of Household Goods
This category is similar to the last but involves receiving payment in order to arrange for the transport of household goods owned by another party. A key trait of an entity that requires this type of operating authority is that the motor carriers used will offer storage, loading, and unloading at personal residences as a part of their service (moving companies).
There are also other types of motor carrier authority that you can apply for, but they aren’t as common and many trucking companies do not fall under the requirements.
- Freight Forwarder
- Motor Passenger Carrier
- Non-North America Domiciled
- Mexico Based Carriers
Insurance Requirements for Obtaining Motor Carrier Authority
When applying for your authority, you’ll have to file proof of insurance (depending on which category you are applying under). In most cases, you’ll have to file form “BMC-91” for proof of Bodily Injury and Property Damage Insurance to the tune of $750,000 in most cases. Additionally, carriers of household goods will need to file form “BMC-34” or “BMC-83” showing proof of cargo insurance.
There’s another form that is related to your insurance that needs to be completed as well. The MCS-90 Form is a document that is issued by your insurance company which states that they will accept responsibility for the cost of damages if an accident were to occur while you were uninsured. The purpose of this document is to protect the general public from uninsured motor carriers.
Other Requirements to Apply
While all the above is the most general information about getting motor carrier authority, there are a few other requirements that you should be aware of. In most cases, these are pretty simple and straight forward.
Process Agent Designation Form BOC-3
You’re required to maintain a process agent in every state that you operate in. This is reported by submitting form BOC-3 Designation of Process Agents to the FMCSA. There are many services that will designate an agent in all 50 states and file the form electronically for a nominal fee. That is usually the most efficient way of meeting this requirement.
Unified Carrier Registration
UCR registration is paid to the state that your company is based and starts at $76 annually for 1-2 power units. Registration is done completely online at this website, and only takes a few minutes.
IFTA is an agreement that is in place by the lower 48 States and Canada that is used to simplify the reporting of fuel use by motor carriers who operate in multiple jurisdictions. All carriers will have to report their fuel purchases and how many miles were traveled in each state on a quarterly basis. You’ll have to be sure to stay on top of this requirement to keep your mc number in good standing.
IRS Form 2290
Form 2290 is known as the Heavy Vehicle Use Tax, and it is required to be filed annually to report taxes owed on a each commercial vehicle with a taxable gross weight of 55,000 lbs or more. If you are reporting a for larger carrier that has more than 25 taxable trucks in it’s fleet, the IRS requires this form to be e-filed.
Prepare for Your DOT Audit
Within your first 18 months of being in business, the DOT will do a random audit to ensure your compliance with the following:
- Drug and alcohol screening
- Driver qualification
- Fleet maintenance
- General compliance
There are numerous services available that make this process of staying in compliance less of a headache.
Can you Handle All of This on Your Own?
The process of getting your motor carrier authority is pretty well documented online, but there is a lot that goes into it. Further more, you aren’t out of the water after getting approved. Many of the requirements must be met annually in order to keep your motor carrier number in good standing. Download our MC Authority checklist to help keep yourself organized during the process.